Inertia in travel choice: The role of risk aversion and learning

Abstract

This paper contributes to literature by showing how travellers that make normatively rational choices exhibit inertia during a series of risky choices. Our analyses complement other studies that conceive inertia as the result of boundedly rational or even non-deliberate, habitual decision-making. We start by presenting a model of risky travel choice based on Bayesian Expected Utility maximization premises. We show how inertia emerges due to a learning-based lock-in effect: travellers learn about risky attributes such as travel times and costs by observing the performance of a chosen alternative. Given risk aversion this implies that repeatedly choosing the same alternative from an initial set of equally risky alternatives is a rewarding strategy. We then extend our model to capture forward-looking behaviour and the availability of travel information: we show how inertia grows somewhat slower among forward-looking travellers, and how the provision of multimodal pre-trip travel information may somewhat reduce inertia growth, to the extent that it is reliable. Combining our findings with the large body of literature on inertia emerging from boundedly rational and habitual behavior, we argue that expectations regarding the potential of travel demand measures to counter inertia should be modest at best.

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